TLS Continuum Part 22: Management what were you thinking? The good and bad of quotas

Everybody has them. Every organization has them. As the global workplace we call them by many names. But when we refine them to their roots they are all quotas. Salesmen are told they have to sell so many units. The rank and file are told they must produce so many units per work shift. Customer service is told they must handle so many customer calls per hour. These are quotas. If it looks like a quota, acts like a quota or smells like a quota it is a quota. So that brings us to the basic question of this week’s segment of the TLS Continuum Blog Series – Are quotas good or bad?

From the Bad side of the coin, Deming in Out of the Crisistells us that quotas are a fortress against improvement of quality and productivity. The establishment of numerical production leaves the customer on the short end of the process. As an organization you strive to meet those numbers no matter what it takes. Your CSR’s are told they have to talk to so many customers an hour. The result is that in order to meet that quota the CSR may not fully respond to the demands of the customer. It is very much like the Dr’s offices these days. You are in and out of the examining room within 15 minutes. The game now is based on how many patients or customers can you push through the door in a given time period. The salesman who is told they have to reach a particular sales quota find they do not have time to develop the long term relationship with the customers any more. The goal is do what ever it takes to get the signature on the bottom line. Customer service becomes secondary to the sales process. Customer service becomes secondary to Customer service process. It forces actions that may not be in the best interests of the organization in the long run. If you are that CSR and you are told that you MUST talk to 25 clients per hour, the tendency is to do just that. In the end you have not served your customers if you don’t fully answer the questions. On the factory floor if you know that a certain productivity level is expected you will meet that level even if it means sending along parts that are not error free. The other problem with quotas on the bad side is that often there is no rhyme or reason on where the numbers came from. When I worked in retail on the business-to-business side of the house, we were given sales quota numbers that did not take into consideration that environment we were selling in. I was criticized for establishing a relationship with a client because it did not help me get to the sales goal.

On the good side of the coin, when we establish metrics for our processes we are to some degrees establishing a “quota” however they are not quotas per se. Our metrics provide us with a guide as to how well we are doing in meeting the demands of the customer. The process metrics alert us to deviations from our standard of work. Unlike the typical quotas, our metrics are based on some logic. If the process is aligned with the organizational objectives and strategy the metrics will tell us we fall within the error spread. If the metrics tell us that we are outside of the spread, then we have steps we can take to bring it back into alignment with the organization and customer demand.

Management what were you thinking? No organization can survive or operate without some form of systemic process for measuring how well you are doing. The downside is that when you allow that quota to govern the behavior of the human capital assets or the management team you in turn affect the organizational performance. You have a need to create a more agile organization, which is based on doing things faster, better and cheaper. You do not accomplish this by pulling numbers out of thin air. The numbers you use in tracking performance must find its basis within the organizational processes. It must contain real numbers that are evidence based originating from the metrics of actual performance not a hypothetical scenario. Are your metrics evidence based or made up quotas? Email me with your thoughts at dan@dbaiconsulting.com